Digital Transformation of Public Finance and Fiscal Depth: Impact on Spending Efficiency to Achieve the Sustainable Development Goals in Iraq

Background Digital transformation of public finance is a fundamental pillar for achieving modern and effective public financial management. By enhancing transparency, reducing waste, and improving efficiency in the allocation and use of public resources, digital transformation directly contributes to raising the level of efficiency of public spending. This efficiency, in turn, is a vital factor in countries’ ability to finance and achieve the Sustainable Development Goals, which positively impacts the long-term well-being and sustainability of societies. The research includes an economic analysis of the relationship between the digital transformation of public finances and spending efficiency to achieve sustainable development goals, with a focus on the Iraqi economy during the period 2007-2023. Methodology Using a quantitative analytical approach based on quarterly time-series data (N = 63) covering 2007 Q 3 to 2023 Q 1, this research provides an empirical assessment. Fiscal depth (FD) is employed as a structural proxy for digital financial capacity. Per capita education spending (SE) and health spending (HS) are explicitly defined as quantitative fiscal allocation indicators rather than direct operational efficiency scores. Model lag selection was automatically optimized using the Akaike Information Criterion (AIC) in EViews Results The results indicate a statistically significant positive dynamic impact of fiscal depth on spending allocation in the short term. However, the bounds test reveals the absence of a long-term cointegration relationship for health spending, demonstrating the structural oil-dependent bottlenecks in Iraq. Model diagnostic issues regarding heteroskedasticity were systematically corrected using Huber-White robust standard errors. Conclusions These findings contribute to policy recommendations urging the Iraqi government to develop clear roadmaps for implementation and address skills gaps in infrastructure and workforce to ensure the sustainability of digital reforms.